Democrats’ Bogus Lease Claims in “Use It or Lose It” Proposal Stymie Real Energy

[audtatious]

Washington, DC – Today the Institute for Energy Research released a chart that debunks the myths surrounding the development of federal leases. As Russia threatens Europe’s oil pipeline in Georgia and Iran threatens to cutoff Middle East oil at the Strait of Hormuz, America’s energy and economic security depend on understanding the reality of domestic energy development, says Institute for Energy Research President Tom Pyle.

Democrats, though, are blocking access to US energy resources with phony claims that oil companies are just sitting on 68 million acres of untapped leases and don’t require access to new areas, he says. To strike home that message, they want oil companies to lose leases that are undeveloped within 10 years.

Pyle points out: “The reality of energy production is that it is much like hunting for a needle in a haystack. For every 60 leases permitted, you get at best one potential well. Oil companies aren’t just sitting on leased land that could be in production. Many of those permits are in various stages of development from the research stage to the environmental assessment stage to production. In the best case scenario, with all 68 million acres, the maximum acreage actually likely to produce oil is 113,000.oil.”

“This is why it is critical that the U.S. open more of our resources to drilling, so the best and most economically feasible fields can be developed. The notion that oil companies are just sitting on oil leases is a myth.” Pyle added. “At a time of high oil and gasoline prices and increased energy insecurity, politicians need to become fully educated about the realities of energy development, not engage in sound bite campaigns on bogus claims about them.”

Fact: Lease agreements already contain federal requirements that leased land be used in a timely manner. The 1992 Comprehensive Energy Policy Act requires energy companies to comply with lease provisions, and explore expeditiously, or risk forfeiture of the lease.

Fact: Oil exploration is a long, complex, arduous, risky and expensive process. It starts with a proposal about what type of geologic structures could potentially hold this vital resource. Based on that idea, companies purchase leases: agreements that allow them to test their ideas, and hopefully find and produce oil and gas from leased properties.

Fact: 60 leases translates into: 50 leases with potential for oil and gas, 25 actual prospects, and only 11 drillable prospects and ultimately only 1 actual well that may produce oil or gas. If we are talking about 68 million acres of inactive leased land that means at best we have 113,000 potential wells.

[Soravia]

The fact is, local oil is cheaper than foreign oil.Oil companies would the dumbest guys on the planet to not look for local oil fields (that have high yield).

Since the initial cost of operation is high, there has to be a lot of yield for a company to start investing in the search for potential high-yield oil wells.

If the politicians want the oil companies to drill so much, why not MAKE them do it and offer up to take up the cost? After all, if there IS good amount of oil, the investment will surely return.

[audtatious]

The problem with our current situation is that our internal oil production is so low that simply disrupting foreign oil distribution will hurt us big time and probably cause our whole economy and infrastructure to fail. It's something that those who don't want to drill refuse to see. We are relying on unstable countries to ensure our economy due to our dependence on their oil and it is absolutely the wrong bet to take today.

[rn79870]

I dunno, I can't see a problem with a lessee losing a lease if he doesn't use it. Kind of like homesteading, no improvements, no homestead.

After all if there is oil there, they owe it to the consumer to get it.

Perhaps they are manipulating supply and demand by sitting on the leases and not developing them?

[smockers83]

Not necessarily. Manipulating supply only works to a certain degree. It raises prices, but does it always raise profits? No, it does not. As prices go up, businesses in the industry are enticed to produce even more at those prices in order to make profits they wouldn't have made otherwise. If prices are already high, manipulating or manipulating more will hardly be beneficial and most likely detrimental.

Being from an area where prospecting for mining is become a huge project again, companies will spend years just trying to find areas to prospect, and then they finally drill test holes for samples, which takes another year, and then they finally decide whether its good or not. Once they decide its good or not, it can take years to even begin setting up even though they have all of their plans submitted. The recently proposed mine in the area, permits were submitted two years ago and approved and there is still no final decision on the direction of the mine. 2002 is when they thought they discovered deposits worth mining, who knows how long they were searching for.

[OriginalWheelman]

After all if there is oil there, they owe it to the consumer to get it.

I suppose McDonald's owes it to you to make you a cheeseburger then.

Libs claim this won't work because of how long it will take to get the oil. One of the reasons it takes so long is they need a detailed "Environmental Impact Study" that can take YEARS to get finished, before they can even drill. Who's responsible for those?

[rn79870]

I suppose McDonald's owes it to you to make you a cheeseburger then.

Libs claim this won't work because of how long it will take to get the oil. One of the reasons it takes so long is they need a detailed "Environmental Impact Study" that can take YEARS to get finished, before they can even drill. Who's responsible for those?

Funny thing, that study counts as "working" the lease. Guess again.

[OriginalWheelman]

I was talking about how long it takes to get the oil, not the lack of using the leases. Try reading it properly next time.

[rn79870]

Gee, I assumed you had read the OP and were responding to it.

Who cares if it takes more time when they follow the rules, we're talking about leases that are sitting dormant. Personally, I like environmental protection laws. Great things they be.

[OriginalWheelman]

I am talking about the issue. Offshore drilling. I was expanding on the point.

Fact: 60 leases translates into: 50 leases with potential for oil and gas, 25 actual prospects, and only 11 drillable prospects and ultimately only 1 actual well that may produce oil or gas. If we are talking about 68 million acres of inactive leased land that means at best we have 113,000 potential wells.

One of the major concerns continually brought up is the time delay it takes to get the oil. In between 25 actual prospects and 11 drillable prospects, they need years to get the EIS done. How many of these leases are in this stage? How many are in cue for exploration? There is a lot more going on here than using the lease or not. Just investigating using the lease takes time and you can't expect a company to explore them all at one, as they have a bottom line to cover, and a limited supply of trained workers. I have a friend who is a geologist, and does this sort of work if you would like to talk to him about it. I was looking into buying an old gas station and for me to have them come out and just drill the necessary core samples and test them would take 8 months ans $35,000 dollars. We're talking about less than an acre and the gas station wasn't under a mile of ocean.

[Soravia]

Even if the LAND leases yield oil to a significant amount, there are issues and cost to cover in terms of transportation for oil, workers, equipment and all that. You can't have people drilling in the middle of no where. Every oil sites gets to have an oil town. They are very expensive places to live too.That means drilling oil = building a small town. That's a lot of money to spend.

[audtatious]

Who cares if it takes more time when they follow the rules, we're talking about leases that are sitting dormant. Personally, I like environmental protection laws. Great things they be.

I'm assuming the investors care what it costs to drill for oil as they are the ones footing the initial bills and gamb|ing that they can make money on it. You have a oil company with a lease, they "speculate" the lease, they spend money doing geological studies for multiple locations. When they finally find a spot they want to drill then they have to spend money doing environmental impact studies. Then they have to fight against environmentalists in court because the envio's will try what they can to stop them. After that, if they do find oil there is no guarantee they won't be wrapped up in court again to have the opportunity to actually pull the oil out of the ground. This happens time and time again and over and over within the court systems. Enviro's will go out of their way to try and stall or stop anything to do with oil, gas and nuke power. All of this raises the overall cost to actually get the oil out of the ground so the well itself must be able to produce long-term for them to actually be able to make any money. I'm sure there are plenty of spots where millions of barrels could be pulled out but the overall end-cost is greater than the worth to pull it from the ground, thus they look for bigger fields.

I'm not against justifiable environmental laws. I am against the environmentalists keeping things wrapped up in the court system with injunction after injunction simply to try and make the profit margines so tight it's not worth the effort or hoping they get a liberal judge.

Of course, the whole article I quoted is more about the BS that the Democrats are pushing forth as fact.

[telcoman]

I was looking into buying an old gas station and for me to have them come out and just drill the necessary core samples and test them would take 8 months ans $35,000 dollars. We're talking about less than an acre and the gas station wasn't under a mile of ocean.

Old gas stations often had metal single bottom tanks that were suseptable to leaks into the groundwater, a frequent cause of cancer. If you were not prepared and had the necessary resources to clean up the location better to just leave it alone. The state and federal government certainly had a interest in not allowing the existing unknown condition of those tanks to be reused.

Telcoman

[OriginalWheelman]

What? My point is merely that these survey teams are nto cheap, and their job takes some time. I"m only pointing out that I was looking at the gas station because this is how I came to know the price. I'm providing the basis for my information. It has nothing to do with clean up or whether or not I bought the gas station.

[audtatious]

Old gas stations often had metal single bottom tanks that were suseptable to leaks into the groundwater, a frequent cause of cancer. If you were not prepared and had the necessary resources to clean up the location better to just leave it alone. The state and federal government certainly had a interest in not allowing the existing unknown condition of those tanks to be reused.

Telcoman

Which is actually not a problem and is how it should be. Of course, if he were a "corporation" (sometimes not because it's easy to get the little guy to fold quicker) then he would be sue'd by advocacy groups in order to keep him from doing it in the first place. If he won, they would file again and keep it up using their free pro-bono lawyers until he was bankrupt or until the scales tipped away from profit. Who cares if the gas station would be helpful to the local population or not. Environmentalists want to do anything they can to limit growth and try to put things back to the stoneage. Of course, they would not allow you cook fires because of pollution (look at china) so most of the population will have to die to make them happy.